Are you an investor seeking to invest in private equity asset class, but unable to commit huge sums of money?

Public funds are investment firms that are listed on exchanges and seek investment opportunities in privately held companies.

Public funds are independent investment companies that invest in a wide variety of asset classes though they typically tend to focus on private equity and venture capital funding opportunities. Public funds allow investors with two distinct advantages; they let individuals participate in private equity asset class for a much smaller amount, and they bring in much needed liquidity for investors. Unlisted private equity investors generally have to commit large amounts and stay locked-in for 10-15 years. In essence, public funds open private equity asset class up to a whole new group of investors. Private firms can float a public arm to access permanent capital instead of raising money for a fund that has limited shelf life.

Typically, there are two types of publicly traded private equity funds.

a) Direct investment companies which invest in a basket of companies selected by a manager who also manages Limited Partnership institutional funds.

b) Fund of funds invests in a diverse range of private equity funds with an aim to diversify portfolio.

Challenges

Public Funds continually invest and re-invest, they have no fixed lifespan. Investors should conduct rigorous due-diligence before choosing a particular Public Fund

Public Funds display similar risk and return characteristics as their unlisted counterparts and may not be suitable for all investors

Public Funds provides small individual investors with a good starting point to investing in private equity in general. No minimum investment commitment is required, neither there are issues with fixed investment horizon